The way we deploy software is changing. Our research and others shows that enterprises are moving away from on-premise apps. and moving to private and public cloud offerings. But here is the basic question that is seldom asked. When a company deploys to the cloud does that boost revenue and returns to stockholders? Are high performing companies separating from low performers by their knowledge of and use of cloud technologies? Our recent Business Agility study says clearly that they are not.

Let me give some context for this statement. Forrester is putting significant effort into Business Agility – what it is, how it relates to the success of companies within industries, and what foundations business agility is built on. We’ve identified the three types of agility that companies must develop -- Market, Organizational, and Process agility – and evaluate ten separate dimensions that make them up. We found out which of the ten dimensions were the most important, defined as driving growth in revenue and profit (see the Agility Performancereport).

And here’s the point. Infrastructure Elasticity – which is our agility dimension for all things cloud, accounted for almost no difference in enterprise performance. Enterprises aggressively embracing cloud solutions did not perform better than their peers. In fact in some industries, they performed worse.

What does this tell us? Think of cloud deployment or Infrastructure Elasticiy, as we call it, as an enabler for other dimensions that make your business more agile and hence higher performing. Dimensions that directly drive revenue – like Channel Integration and Market Responsiveness. Unlike Infrastructure Elasticity, these show huge gaps between high and low performing companies. Or Business Intelligence, by far the most important “Process Dimension” can be acclerated via cloud options directly to the business. These are a few crucial agility dimensions that can benefit from cloud deployment. Organizational dimensions – like Digital Phycology and Change Management also showed stronger gaps but have little to do with cloud deployment. Cloud providers the coming years will demonstrate how their solutions enable agility across market and organizational dimensions that directly drive economic performance.

Comments

'Are high performing companies separating from low performers by their knowledge of and use of cloud technologies? Our recent Business Agility study says clearly that they are not.'

That there is a weak relationship between infrastructure elasticity (nice term) and business success is no surprise really, as if you are making things that nobody wants, it doesn't matter how elastic is your technical infrastructure and operational business processes. So to really answer the question, does cloud matter, it would be necessary to examine performance of companies with all those other more critical factors being equal.

Most useful then would be to identify those characteristics that distinguish between increased or decreased business process elasticity when cloud technology is deployed.

I fully agree with you. The value of the cloud is not in the infrastructure. It is in the way that smart organizations leverage the "connectedness" and often lower cost to provide services that turn into new or expanding revenue streams.

The benefits and ROI for cloud are only realized when it is used to solve an existing or new problem better.

It is the same with the "Internet of Things" where the value is not in the "big data" or the smart devices, but what you do with them to give you a competitive advantage, create a new revenue generating product or service, or improve current operational effectiveness.

Cloud, like mobile, is just a mechanism. If you don't use it to create value, it doesn't matter.

Cloud from an infrastructure perspective is a cost management or reduction tool, whereas solutions provided to the business users as "cloud" service is an opportunity for revenue growth.

You can enable a business to be agile through the more dynamic applications delivered in a SaaS paradigm (which can be private, enterprise or public solutions).

Business Intelligence/Analytics, Content management, Business Process Management - make them agile rather than 2 year product upgrade deployments as major IT projects, and let the business users do what they're good at.

The title of the blog took me back in time to 2003 when Nicholas Carr published his famous article "IT Doesn't Matter"... Those of you who are too young to remember :) should check it out- it created a lot of noise back then....

I tend to agree with the content - but claim that it really depends on the nature / size / stage an organization is at.

For example if you take 2 start-up companies working on the same concept and one uses full Cloud apps while the other uses On-premise solutions - I claim that in this case "Cloud does matter" - the one using cloud apps has a leverage on the other company and assuming they both work in a limited resource environment - then it is better to focus on their startup and not on the many challenges on-premise and traditional IT machines bring with them...